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The government will reduce the level of income support paid out under the jobkeeper and jobseeker payments from 28 September, and create two payment tiers for the wage subsidy to ensure the rate aligns more closely with people’s pre-Covid income, rather than giving part-timers and casuals a pay rise.

The overhaul will be unveiled by The Prime Minister and Treasurer today ahead of an economic statement the government will deliver on Thursday. As well as lowering the rate of both the jobkeeper wage subsidy and the $550 coronavirus supplement in jobseeker after September, the government will tighten the eligibility requirements for both payments – including retesting businesses in October.

The government will confirm the jobkeeper payment will run through until March 2021, consistent with the timeframe of a separate wage subsidy for apprentices unveiled in a skills package last week.

The long-telegraphed overhaul follows a review by the Treasury. The department examined the income support rolled out during the pandemic in May and June, and handed its recommendations to the government on 29 June. The Treasury advice has not been released, but the government circulated its own summary extracts of the advice ahead of Tuesday’s announcement.